Trade Wars: Students Face Off in Market Contest

NYMEX Competition Simulates the Fast World of Wall Street Buying and Selling

March 23, 2009

Amid the frenetic shouts of buy and sell orders in a mock trading pit, four School of Management students recently proved they can excel under pressure by putting their business school expertise to work in the heat of competition.

The finance students competed against 30 top business schools from across the nation in the 2009 New York Mercantile Exchange (NYMEX) Commodities Challenge.

The mock trading competition, sponsored by Hofstra University, Columbia University and the University of Houston, mirrors the high-stakes dynamics of trading commodities futures on Wall Street.

The challenge consisted of two parts: the desktop trading team challenge involving the trade of oil and gold futures, held Feb. 2-20, and the “open outcry” for individual students held Feb. 28 at the University of Houston.

Although UT Dallas’ graduate and undergraduate teams did not advance to the finals in the desktop challenge, four UT Dallas students were selected to move on to the final round of the open outcry. Those students include: undergraduate students Derek Connell, Crystal Hu and Jared Miles and graduate student Josh Svendsen.

The students represented not only UT Dallas, but also the university’s student finance organization, the Financial Leadership Association (FLA).

“Whether you win or lose, it’s a great learning experience,” said Frank Anderson, FLA adviser and finance faculty member.

Anderson and David Cordell, director of finance for UT Dallas, encourage students to participate in NYMEX and similar competitions that expose students to real-world issues.

Finance faculty members recently hosted a “shadow” competition for students who had never competed before to prepare them for a regional investment challenge. Students presented analyses of a company’s stock portfolio to two Chartered Financial Analysts, who served as judges. The students intend to compete in the Investment Research Challenge next year.

“The shadow competition allowed students to get their feet wet and see what it’s like to prepare and compete, which will ultimately help them to succeed in not only competitions with other students, but also their careers,” said Cordell.

Lessons Learned

In the open outcry, students experienced what it’s like to trade as a broker. Judges determined which students were the best traders with the fewest mistakes and best overall bids.

“When the closing bell sounded, it was bittersweet because it was a relief to know that the tension was over, but the excitement and thrill of the sport was over as well,” Svendsen said.

“In the second and third rounds, I believe I traded very well. I was so confident by that point that I was executing trades on my own account, buying low then selling high, or selling high then buying low. I was also very careful not to let any of my customers’ orders go unfulfilled,” said Jared Miles, who will graduate this May with a bachelor's in finance.

Three of the four UT Dallas competitors had no trading experience before the competition.

“The first round was the hardest because this was my first time competing in a competition like this where people are screaming all around you,” said freshman Crystal Hu. “It was hard to listen and yell at the same time, as well as catch the right moment to enter the market.”

FLA President Jeff Harrington, who also competed, said team members prepared for the competition at a training session before the event.

“When we got to the hotel, I re-emphasized the semantics behind how to trade, execute orders, project the voice from the diaphragm and not the throat and the physical motions for buying and selling,” Harrington said.

Anderson says the time that students spend on the contests will prove a good investment.

“When employers look at resumes, they’re going to give priority to those who have that little something extra,” Anderson said. "So those who have competed and succeeded are going to be ahead of others who haven’t.”